Barclays, GlaxoSmith Kline slash IT contractor rates

Not nice

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In a peculiar turn of events this week Barclays Bank and GlaxoSmithKline have announced that the rates typically paid to their IT contractors will be slashed by as much as 25% in the coming months.

The news has come as a bitter blow to contractors employed by the firms and, worse still, to the rest of the contractor community in the UK. The fear is that these measures could set a precedent for all employers, and it could have dire consequences.

According to reports across the wires, Pam O'Keefe from Barclays told a popular contractor web site that the firm would soon be making cuts in the rates paid to contractors. It was noted that this could affect as many 800 people at Barclays alone. Perhaps more worrying, O'Keefe added that the company wouldn't be concerned if all of the contractors walked out.

This looks like a put-up or shut-up move from the bank. It's telling its contractors that they can take the pay cut, or leave. Simple as that. No discussion, no negotiation. The argument put forward by Barclays for the cuts was that contractors are, simply, expensive.

If you look under the covers of this announcement, this looks like Barclays and GSK holding their hands up and admitting that they have failed to manage their contractor resource. Theoretically, a contractor is used to fill a short-term skills gap. They come in, do their job and, an intelligent company will ensure that these skills are transferred to permanent staff - through teamwork, shadowing etc.

A company which does this, and therefore is managing the contractor resource well, will not find themselves with an expensive contractor resource. They will instead find that they have solved a problem cost effectively. The reality of many contractor roles is that companies bring them in and let them milk the company for years and years. That's bad management and that's what it looks like has happened here.

Still, this is a worrying development for much of the contractor workforce in the UK. Having had a turbulent few years thanks to IR35 tax regulations, it now seems that contractors are to be punished for developing a set of, once highly prized, skills.

The great fear is that, since this announcement has been made by two heavyweights, the rest of the UK may follow suit and slash contractor wage bills further.

And it's not the contractors' fault. To blame are their employers and, perhaps, the IT industry as a whole which, arguably, has been robbing companies blind for years. Vendors have been pushing out pointless, bloated, over priced, un-integratable solutions for years, and companies like Barclays and GSK have suffered at their hands. Now, because of economic pressures, they are seeking dramatic cuts.

The IT backlash which started last year when budgets and spending were slashed is now creeping down the ladder. The tech buyers realise that they can't do much to influence the omnipotent IT vendors, so instead they're hitting the panic button and trashing the contractors. It's a sorry state of affairs.

But maybe inevitable. The IT workers in the 21st century would be the equivalent of the miners in the late 20th century - namely, cheap, disposable, commodities.